Metals Shine The Best

The relaxing of virus restrictions in China, the reduction of steel export duty and the drop in coking coal prices all contributed to the rally

The Indian benchmark indices experienced a robust rally in the first week of the fortnight, matching the global upswing sparked by Federal Reserve’s hints of a slowdown in interest rate hikes starting in December. The domestic indices reached new all-time highs, bringing back the long-missing optimism. India’s foreign exchange reserves strengthened for the third week in a row as a result of reducing pressure on the rupee and a drop in crude oil prices. The indices then tumbled significantly as a result of profit booking and the Reserve Bank of India’s ratesetting panel hiking lending rates by 35 basis points while reducing its forecast for real GDP growth to 6.8 per cent.

According to figures issued by the Ministry of Statistics and Programme Implementation, India’s GDP growth declined by more than half from 13.5 per cent in April-June to 6.3 per cent in July-September. Moreover, in October, the growth rate in the production of eight major sectors dropped to a 20-month low of 0.1 per cent. Over the span of a fortnight, the BSE Sensex and Nifty 50 declined by around half a per cent while broader indices outperformed the main benchmarks. In spite of the uncertain economic climate, the BSE Mid-Cap index performed great and enticed investors with a gain of 1.23 per cent. Higher input cost was the primary cause of the unsatisfactory quarter performance recorded by the metal industry.

However, despite the obstacles, BSE Metals remained the top-performing sector over the fortnight, climbing 4.12 per cent. The relaxing of virus restrictions in China, the reduction of steel export duty and the drop in coking coal prices all contributed to the rally. The best-performing stocks in the sector were Hindalco Industries, Tata Steel and National Aluminium Company. Decline in commodity prices would enable FMCG companies improve their profitability while also helping them to pass the advantages to customers by cutting product prices. BSE FMCG surged almost 4 per cent on the back of a promising sector outlook and FMCG stocks continued to lead gains despite dismal sessions.

Although IT companies were in the spotlight for signing contracts with multinational corporations, making acquisitions and securing sizeable orders, weak global cues and a downturn in global technology equities caused the domestic sectoral index BSE IT to tumble. Strong US’ service sector data and fears about a Federal Reserve interest rate hike were the biggest drags on the IT sector over the fortnight, and as a result, BSE IT plunged more than 3 per cent. Over the last two weeks, both FIIs and DIIs were net buyers with FII and DII inflow being recorded at Rs 5,530.72 crore and Rs 2,376.51 crore, respectively.